If you close your ears for a moment to the angry sounds of banker-bashing – of which, by the way, there should be more, not less – much that is said and written about British banking today has the distinct feel of a Great Rearrangement, if not a Great Return. The Mansion House speeches delivered by George Osborne and Mervyn King were only the latest examples of age-old banking verities being presented as novel discoveries; yesterday's statement by the Chancellor on banking reform, still more so.
The prosperity of this country, and its capital city, were built on a reputation for solidity and trust in banking, enhanced by the good fortune of our time zone and the English language. It is salutary to hear the Governor of the Bank of England, as he did on Wednesday night, say – in effect – that the banking sector had grown out of all proportion to the British taxpayers' capability, and indeed duty, to save it from itself. It is back to the basics of cutting coat according to cloth, keeping tabs on the money supply, monitoring lending, and adjusting levers here and there to prevent credit running out of control. This is about where I came with my first bank account and my first mortgage (two and a half times one salary, add one time a second salary if you can persuade the bank manager). Thirty years and a massive credit bubble later, this seems to be where we are heading again.
The other direction we are heading, as spelt out by the Chancellor, is back to the separation of retail and investment banking. Again, you have to ask how it was that this fundamental principle was ever abandoned, but that is an argument for another day. Alas, it appears that the two will not be separated as rigorously as they once were, leaving open the possibility of underhand cross-subsidy between boring old retail banking and exciting global gambling. But if it means that ordinary savers and spenders will no longer be invited to "close a deal" or "make a bet", when all they want from their bank is a current account and a safe haven for modest savings, that can only be an improvement.
In all the mis-selling scandals – whether of "financial products" or mortgage protection insurance – the same story is told time and again. The aggrieved parties are average, responsible individuals, trying to do the right thing, bamboozled by a host of sweet-talking stratagems into accepting the very degree of risk they went into the bank expressly to avoid. Every small-time saver was treated as a big-time investor. This was irresponsible and absurd – except, of course, for the small-time bankers playing at big-time investment, who enriched themselves with commission at every turn.
It can only be the endearing conservatism of Middle Britain that has prevented a headlong rush from the high-street banks – and, of course, the lack of alternatives. A few interlopers are starting to take custom here and there. The new Metro bank from the United States offers round- the-week, almost round-the-clock banking; a couple of Scandinavian banks are dipping a toe in some provincial British waters and promising old-style personal service, with decisions made there and then. The supermarkets are talking about branching out into banking. But the incursions so far are tiny, and largely retrospective in tone. Which is why it might be worth considering whether this really is the new face of British banking, or whether something else, something quite different, might be waiting just around the corner – but not necessarily the corner the vast majority of people with regular bank accounts might think of looking around.
Earlier this year, the Financial Inclusion Task Force, an independent group set up under the auspices of the Treasury to consider the plight of Britain's so-called "unbanked", was wound up – as planned – after six years of work. In a valedictory report, its chairman, Brian Pomeroy, noted that between 2005 and today, the number of those without bank accounts had fallen from 3.5 million to around a million. But one of his messages was that this fall – while obviously a good thing – could be misleading.
Many people kept a bank account only because this was the only way they could receive their salary, and operated in every other way only with cash, which meant any benefits from standing orders, internet shopping and the rest were denied them. He stressed the extent to which their experience of opaque charges deterred some from the whole idea of banking. He highlighted the disadvantages for those who do not enjoy access to mainstream credit.
But a running theme of his analysis was what, he said, many people found to be the offputting atmosphere of most high-street banks, which seemed alien territory to those made to feel they were not "one of us". Afterwards, a banking representative objected that the banks had recently been doing a great deal to "improve the banking experience". To which Mr Pomeroy countered: "It's not about improving the experience, it's the experience itself." As the banks introduce "greeters" at the entrance, more complicated machines that do more things, and insist that you can't open a savings account without an appointment with an "adviser", I am finding the banks increasingly alien territory, too.
The alternatives might go in two directions. One would be a much more utilitarian (and class-less) approach, such as supermarkets – if they ever get around to offering real counter services – might supply. The other would be to follow the "unbanked" and dispense with the high-street branches entirely, relying on money agencies and mobile phone transfers – such as are already becoming common in parts of Asia and Africa. As for credit, it is easy to condemn so-called "payday" loans, the loan "sharks" who stalk poor areas of town, and the whole concept of pawn shops. But they supply a service that is needed, and not always the rip-off it might seem to those of us privileged to rely on mainstream credit cards to tide us over. Might we see more of this, rather than less – not enforced by poverty, but from choice?
For the moment, the established banks and the bankers still have the whip hand. Most of us cannot do without them. One day, though, the face of consumer banking will be transformed. And that day might not be as far away as theoh-so-reasonable forecasts of Messrs Osborne and King would lead us to believe.